SUMMARY OF BOARD DECISIONS

Summary of Board decisions are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue an Accounting Standards Update.

December 12, 2012 FASB Board Meeting

Accounting for financial instruments: classification and measurement. The Board discussed the effects of the decisions reached on the classification and measurement of financial instruments on financial reporting complexity. The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot. The Board also decided that the comment period for the proposed Update would be the longer of (1) 90 days from the exposure date of the proposed Update or (2) April 30, 2013.

Investment companies. The Board discussed how to proceed on the project regarding the accounting for real estate property investments. The Board decided that it would address the accounting for real estate property investments after it completes deliberations and finalizes guidance related to the tentative decisions to date.

The Board also decided to retain the existing scope exception in Topic 946, Financial Services—Investment Companies, which excludes all real estate investment trusts from the scope of investment company guidance. This reverses the Board’s previous decision on the applicability of investment company guidance to mortgage real estate investment trusts. The Board will revisit the accounting for mortgage real estate investment trusts when it discusses real estate specific issues.

Liquidation basis of accounting. The Board continued its redeliberations of the July 2, 2012 Exposure Draft, Presentation of Financial Statements (Topic 205): The Liquidation Basis of Accounting.

Recognition

The Board affirmed the proposed guidance requiring an entity to prepare its financial statements using the liquidation basis of accounting when liquidation becomes imminent. Furthermore, the Board decided to clarify that liquidation would be considered imminent when a plan of liquidation is approved by or imposed on the entity by those with the power to do so. The Board also decided that all entities would be subject to the proposed guidance provided the entity’s liquidation was not as planned at inception.

Measurement

The Board affirmed the measurement approach but tentatively decided to clarify it as follows:

For some assets, a fair value measurement would satisfy the measurement objective.

An entity should accrue for all expected costs and all expected income that is not already reflected in an entity’s statement of net assets in liquidation provided it has a reasonable basis for estimating those amounts. This would include operating costs and income, as well as those specific to the liquidation.

The Board also decided that contractual liabilities should be measured at their contractual amounts until those liabilities have been legally or otherwise settled.

Other Matters

The Board discussed the possibility that the proposed guidance could conflict with statutory reporting requirements for some entities. The Board directed the staff to research potential interactions between those requirements and the proposed guidance and to discuss any potential conflicts with the Board at a future meeting.

Reporting discontinued operations. The Board unanimously affirmed its prior decision to propose the following disclosures about discontinued operations for public and nonpublic entities:

The profit or loss for current and prior periods presented in the statement of comprehensive income, together with major income and expense items constituting that profit or loss

The major classes of cash flows for current and prior periods presented in the cash flow statement (operating, investing, and financing)

A reconciliation of the major classes of assets and liabilities classified as held for sale in the notes to the financial statements to total assets and total liabilities classified as held for sale that are presented separately on the face of the statement of financial position in the current period

A reconciliation of the major income and expense items from the discontinued operation presented in the notes to the financial statements to the after-tax profit or loss from discontinued operations presented on the face of the statement of comprehensive income for current and prior periods

If the component includes a noncontrolling interest, the profit or loss attributable to the parent for current and prior periods presented in the statement of comprehensive income.

The Board unanimously affirmed its prior decision to propose the following disclosures about disposals of individually material components of an entity for public entities:

The pretax profit or loss attributable to a disposed component of an entity for current and prior periods presented in the statement of comprehensive income

If the component of an entity includes a noncontrolling interest, the profit or loss attributable to the parent for current and prior periods presented in the statement of comprehensive income

A reconciliation in the notes to the financial statements of the major classes of assets and liabilities of the component of an entity classified as held for sale to total assets and total liabilities of the component of an entity classified as held for sale that are presented separately on the face of the statement of financial position in the current period.

The Board also decided to propose that nonpublic entities provide the following disclosures about disposals of individually material components of an entity:

The pretax profit or loss attributable to a disposed component of an entity for the current period

If the component of an entity includes a noncontrolling interest, the profit or loss attributable to the parent for the current period.

For a discontinued operation in which an entity retains a noncontrolling interest, the Board decided to propose that an entity disclose information that enables users to compare the financial performance of the entity from period to period assuming that the entity held the same noncontrolling interest in all periods presented in the statement of comprehensive income. The analysis would include the following disclosures until the discontinued operation is no longer reported in the statement of comprehensive income:

If there is more than one disposal reported in discontinued operations for the period, the results of operations of the discontinued operation in which the entity retains a noncontrolling interest

The entity’s ownership interest in the discontinued operation before the disposal transaction

The entity’s ownership interest in the discontinued operation after the disposal transaction

The income or loss in the period(s) after the disposal transaction from the entity’s ongoing noncontrolling ownership interest in the discontinued operation and the line item in the income statement that includes the income or loss.

The Board directed the staff to draft an Exposure Draft for vote by written ballot. The Exposure Draft will have a 150-day comment period and will be issued as soon as possible.

Transfers and servicing: repurchase agreements and similar transactions. The Board decided that a transfer of a held-to-maturity debt security in a repurchase-to-maturity agreement accounted for as a secured borrowing would not contradict the transferor’s stated intent to hold the security to maturity and, therefore, would not call into question the transferor’s intent to hold other debt securities to maturity.